View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Fourth Quarter 2013

DALLASFED

Agricultural
Survey

Quarterly Survey of Agricultural
Credit Conditions in the
Eleventh Federal Reserve District

Survey
Highlights

B

ankers responding to the fourthquarter survey continued to
report negative effects from
drought, although some areas saw improved conditions resulting from recent
rains. Timely rains benefited the harvest
in some areas and the winter wheat
crop in others. Cattle prices remained
strong, and pasture conditions saw some
improvement. Respondents in a couple
regions expect a downturn in agricultural real estate values.
Farmland values in the fourth
quarter were above year-ago values.
Ranchland and irrigated cropland values
increased more than 4 percent over last
year, while dryland values were about 2
percent above last year’s level. Overall,
respondents continued to expect farmland values to trend up.
Demand for agricultural loans continued to decline, as did loan renewals
and extensions. Loan repayment rates
increased again this quarter, with one
contact noting strong oil and gas-related
activity contributing to loan pay-offs.
Volumes for most types of loans continued to decrease. The exception was
operating loans, for which demand was
the same as fourth quarter last year.

Farm Lending Trends
What changes occurred in non-real-estate farm loans at your bank in the past three months
compared with a year earlier?
Index

Beginning with this publication, series
exhibiting seasonal patterns will be
seasonally adjusted.

2013:Q3

2013:Q4

pGreater

Same

qLess

–10.5

–3.6

16.7

63.0

20.3

24.6

27.0

30.1

66.8

3.1

7.5

6.1

11.5

83.1

5.4

–6.1

–6.1

2.7

88.4

8.8

Demand for loans*
Availability of funds*
Rate of loan repayment
Loan renewals or extensions
Index
50

Availability of funds*

40
30

Rate of loan repayment

20
10
0
–10
–20

Loan renewals
or extensions

–30
Demand for loans*

–40
–50

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

What changes occurred in the volume of farm loans made by your bank in the past three months
compared with a year earlier?
Index

Percent reporting, Q4

2012:Q3

2013:Q4

pGreater

Same

qLess

–0.7

–1.4

15.7

67.4

17.0

Feeder cattle loans*

–15.5

–3.7

12.1

72.1

15.8

Dairy loans*

–14.0

–14.0

1.9

82.2

15.9

–5.0

–4.3

5.4

84.9

9.7

5.6

0.0

14.0

72.0

14.0

Farm machinery loans*

–12.7

–12.1

8.2

71.5

20.3

Farm real estate loans*

–10.5

–6.1

10.2

73.5

16.3

Non-real-estate farm loans

Crop storage loans*
Operating loans

What’s New This Quarter:

Percent reporting, Q4

*Seasonally adjusted.
NOTE: Survey responses are used to calculate an index for each item by subtracting the percentage of
bankers reporting less from the percentage reporting greater. Positive index readings generally indicate
an increase, while negative index readings generally indicate a decrease.

} Quarterly Comments
District bankers were asked for additional comments concerning
agricultural land values and credit conditions. These comments
have been edited for publication.

Region 1 • Northern High Plains

XXThe moisture situation has improved, but

drought has not broken yet. Lower commodity
prices will affect profitability next year. As a
result, we have probably seen the top of the
agriculture real estate market.
Region 2 • Southern High Plains

XXDrought continues to hurt agriculture in our
area. We need rain as our water tables continue to decline. Congress needs to provide the
agriculture industry with a workable farm bill.
Region 3 • Northern Low Plains

XXLack of rain continues to be a problem,
resulting in poor crops, no grazing and lack
of stock water. Some pastures haven’t been
stocked in two years due to lack of water. If
we don’t receive rains this spring, we will be in
real trouble for drinking water in area towns.
Region 4 • Southern Low Plains

XXIn our area, we are locked into cotton as our
primary crop. Winter wheat is not an option
other than as a cover crop. With the rise in expenses, we believe cotton will become a very
marginal crop with low profitability. In the near
future we could see some land being turned
into Conservation Reserve Program land or
grass for grazing. We believe this could impact
the farmland values.
XXFarm real estate is not moving, neither for
pasture nor crop land.
XXThe coming year will present multiple problems for those who are not “least cost producers.” It doesn’t appear that the commodity
prices will justify the fixed costs associated
with the debt that most producers are carrying.
We expect land prices and lease prices to decrease. Already we are seeing some producers
sell land in order to make their fixed payments
on their other assets. Only the cattle industry
has a positive outlook in our area, if we are
indeed out of the multiyear drought we’ve
been experiencing.

Region 5 • Cross Timbers

XXDrought conditions have improved slightly,

which allowed pasture conditions to improve
slightly. Some farmers and ranchers were able
to get wheat planted early and have a good
start, if we continue to get adequate rainfall.

12
N E W

M E X I C O

Regions of the Eleventh
Federal Reserve District

XXCattle prices are still very high, especially
for replacements of cows culled due to the
2011 drought that are being sought now that
pastures have recovered some. The dairy
situation is somewhat better. We seem to have hopefully carry over into next spring. Replaceadequate hay supplies. Winter pastures are OK, ment heifers are going to be hard to find in the
spring if rains continue, and prices should be
with adequate moisture in most of our area.
at all-time highs.
XXOur area is still dry.
XXAdequate moisture and good cattle prices
Region 6 • North Central Texas
have had a stabilizing effect on producers.
There have been no agriculture-related land
XXWe had good yields on grain and cotton, but transactions recently.
prices were down from last year. Cattle prices
are still strong.
Region 9 • Coastal Texas
XXGood rains have filled tanks, and winter
XXThere is a probability that real estate prices
grazing is plentiful at this time. Stocker cow
will remain stable or decline due to no Farm
prices are extremely high. There is a shortage
Service Agency direct payments. Most producof livestock in the area.
ers have increased liquidity from the results
of the 2013 crop. 2014 is projected to be a
XXWe expect cattle prices to remain high for
the next eight to 10 years because of the
very mediocre year due to commodity prices,
shortage of cattle. Most of our farmers have
excluding cattle.
had a really good last two years.
Region 11 • Trans-Pecos and
XXFarmers are seeking more grain storage
Edwards Plateau
facilities due to the market decline, especially
in corn. Farmers are strategically looking at
XXShipping weights have been higher this
their crop mix for 2014. Movement away from year for all classes of cattle. Most areas grew
a volatile corn market may include sunflowers some grass, but pasture conditions are still
and milo.
extremely spotty. Range conditions are limiting
Region 8 • Central Texas

XXOil and gas activity remains strong in the

area with new leasing activity bringing in additional dollars and continued loan payoffs from
existing customers. Pasture conditions are fair
to good, with oats and rye grass coming on,
but we need continued rain to be able to start
grazing in December. Hay supplies remain
ample at this time, with producers still having
hay to sell. Calf prices remain strong and will

Agricultural Survey • Fourth Quarter 2013 • Federal Reserve Bank of Dallas

herd growth.

XXLand values have crept up from last year.
They are now back to 2007–08 levels on the
premium properties. The less desirable properties have not been as marketable as they were
pre-2008.
XXThe western Hill Country had some beneficial moisture this fall and early winter, even
though it came with some unusually cold
temperatures, which were hard on livestock.
However, ground moisture conditions at this

Rural Real Estate Values—Fourth Quarter 2013
1
Banks1

3

Average
value2

Percent change
in value from
previous year3

Cropland—Dryland
District*

2

4

L O U I S I A N A

5
6

11

7

T E X A S

8

13

111

1,502

1.8

Texas*
1 Northern High Plains

101
16

1,527
772

1.8
8.0

2 Southern High Plains

13

648

–0.9

3 Northern Low Plains*

10

869

5.6

4 Southern Low Plains*

9

886

–3.9

5 Cross Timbers

9

10

7

1,436

5.1

14

2,232

–0.4

7 East Texas*

5

1,911

–7.0

8 Central Texas

9

2,994

5.3

9 Coastal Texas

5

1,960

8.2

n.a.

n.a.

n.a.

12

1,529

1.0

n.a.
8

n.a.
1,850

n.a.
2.3

88

6 North Central Texas

10 South Texas
11 Trans-Pecos and Edwards Plateau
12 Southern New Mexico
13 Northern Louisiana

time of year are better than in the past several
years. Livestock prices remain high, and some
ranchers remain optimistic that this trend
will continue, due to decreased numbers of
cattle, sheep and goats. For some who sold
out in the last couple of dry years, the price
to restock their herds at this time results in a
bit of sticker-shock. Some older operators or
part-time ranchers have opted to stay on the
sideline for a while. As always, rainfall will be
the key factor in their decision to get back in.

XXCattle prices remain good. Pastures and
grain fields are furnishing good grazing due to
recent rains.
Region 12 • Southern New Mexico

XXLate monsoon rains substantially improved

range conditions and were timely for cotton.
Most of the harvest of cotton is complete, with
pecan harvest beginning.

Cropland—Irrigated
District*

2,211

4.9

Texas*
1 Northern High Plains

75

2,008

2.5

16

2,125

9.7

2 Southern High Plains

12

1,504

–4.3

3 Northern Low Plains*

7

1,596

14.8

4 Southern Low Plains

6

1,442

–1.7

5 Cross Timbers

4

2,413

–0.7

6 North Central Texas

6

2,450

–12.5

7 East Texas

3

2,300

0.0

8 Central Texas

6

3,392

3.1

9 Coastal Texas

4

2,163

–16.7

n.a.

n.a.

n.a.

10

2,335

3.4

12 Southern New Mexico

5

3,540

19.8

13 Northern Louisiana

8

2,775

7.3

131
120

1,457
1,745

4.1
2.9

10 South Texas
11 Trans-Pecos and Edwards Plateau

Ranchland
District*
Texas*
1 Northern High Plains

16

519

6.1

2 Southern High Plains

10

548

–4.2

3 Northern Low Plains

10

905

11.5

9

1,019

3.9

5 Cross Timbers
6 North Central Texas

10
17

1,725
2,244

–7.4
–3.6

7 East Texas

4 Southern Low Plains*

14

2,250

–3.8

8 Central Texas

9

4,044

3.9

9 Coastal Texas

4

1,700

7.8

n.a.

n.a.

n.a.

10 South Texas
11 Trans-Pecos and Edwards Plateau

19

1,634

4.7

12 Southern New Mexico

4

224

68.8

13 Northern Louisiana

7

1,550

4.5

*Seasonally adjusted.
1
Number of banks reporting land values.
2
Prices are dollars per acre, not adjusted for inflation.
3
Not adjusted for inflation and calculated using responses only from those banks reporting in
both the past and current quarter.
n.a.—Not published due to insufficient responses but included in totals for Texas and district.

Agricultural Survey • Fourth Quarter 2013 • Federal Reserve Bank of Dallas

Real Land Values

Real Cash Rents

2005 dollars per acre
2,200

2005 dollars per acre per year
Irrigated

2,000

2005 dollars per acre per year

60

120

Irrigated

50

1,800
1,600

Ranchland

1,400

Dryland

1,200

100

40

80

Dryland

30

1,000
800

60

20

40

600

Ranchland

400

10

20

200
0

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

All values have been seasonally adjusted.

Anticipated Farmland Values and Credit Standards
Long-term farm real estate

Intermediate term

Other farm operating

0

All values have been seasonally adjusted.

Interest Rates by Loan Type

Feeder cattle

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Fixed (average rate, percent)

What trend in farmland values do you expect in your area in the next three months?
Index
Anticipated trend in farmland
values*

6.37

6.47

6.32

6.19

2013:Q1

6.43

6.53

6.30

6.12

Q2

6.21

6.39

6.22

6.01

2013:Q4

pUp

Stable

qDown

12.5

8.6

10.6

87.4

2.0

What change occurred in credit standards for agricultural loans at your bank in the past three months
compared with a year earlier?†
Credit standards

2012:Q4

Percent reporting, Q4

2013:Q3

2013:Q3

2013:Q4

pTightened

Same

qLoosened

4.7

9.5

9.5

90.5

0.0

Index
50

Q3

6.16

6.34

6.25

6.04

Q4

6.16

6.27

6.17

5.86

40
30

10
0
–10

Variable (average rate, percent)

Credit standards †

20

Anticipated trend
in farmland values*

–20

2012:Q4

5.83

5.93

5.94

5.62

2013:Q1

5.87

5.98

5.84

5.57

Q2

5.81

5.94

5.80

5.47

–50

Q3

5.71

5.81

5.71

5.47

*Seasonally adjusted.
†Added to survey in second quarter 2011.

Q4

5.69

5.75

5.71

5.42

NOTE: Survey responses are used to calculate an index for each item by subtracting the percentage of
bankers reporting less from the percentage reporting greater. Positive index readings generally indicate an
increase, while negative index readings generally indicate a decrease.

–30

DALLASFED

–40
2010

2011

2012

2013

Agricultural Survey
is compiled from a survey of Eleventh District agricultural bankers, and data have been seasonally
adjusted as necessary. Data were collected Dec. 3–11, and 149 bankers responded to the survey.
This publication is prepared by the Federal Reserve Bank of Dallas and is available without charge by
sending an email to pubsorder@dal.frb.org or by calling 214-922-5254. It is available on the web at
www.dallasfed.org/research/agsurvey.
For questions, contact Amy Jordan, 214–922–5178.
Agricultural Survey • Fourth Quarter 2013 • Federal Reserve Bank of Dallas